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How to discuss a relative's debt crisis

This is the third installment in the Money Talks series, which offers tips and advice for individuals facing various sensitive financial conversations with loved ones.

If you have a friend or relative who's struggling with credit card debt, you may be hoping that person doesn't deepen their financial troubles this holiday season. But unfortunately, the holidays are precisely the time when shopaholics and poor money managers often fall further into financial despair -- and they're not alone.

Even people who don't usually have a spending problem can rack up sizable debts in December, as the expenses for gifts, home decorations, party supplies and travel add up quickly. But what can you say to someone who's in serious credit card debt -- or perhaps teetering on the brink of it -- this holiday season?

To best aid a family member or friend burdened by debt, you'll need to mix a dose of compassion with a large serving of financial facts. If you feel it's time to start the conversation about debt with someone you love, these guidelines can help.

1. Consider their age

Exactly what you say to someone in debt will likely depend on the person's age. The approach you take with a 22-year-old son who's moved back home after college because of debt could vary significantly from the tactics you'd use with a 60-year-old aunt who's ran up her bills.

"The average student accumulates over $23,000 in student loan debt and $4,000 in credit card debt during their years as an undergraduate student," says Gabe Albarian, a former college student and author of "Financial Swagger," a money-management guide for young adults.

"All these stats basically tell the same story," Albarian says. "Our next generation of college graduates will enter the next phases of their lives in a personal-finance hell composed of a combination of crushing debt and poor credit."

But it doesn't have to be that way. Albarian suggests one practical tip for young adults struggling with credit card debt: Use a secured credit card. Since a secured card has a credit limit that's established by the amount you put on deposit, it forces users keep their spending in check.

"If a pre-retiree does not own his home, can the mortgage plus vehicle loans and credit card debt be paid off before the planned retirement date?" Copelin asks. If not, the person needs to get working on a plan to determine if a comfortable retirement is attainable.

"Do you want to try to pay off your credit card debt in one year, plan for that milestone birthday trip in three years, or ramp up your nest egg so you can retire in 10 years?" asks Descano. Your answers to questions like those should affect how you approach the situation.

2. Help explore payoff options

There are several refinancing solutions that may help relieve your relative's debt burden. For those struggling against high interest rates, a credit card balance transfer can offer lower interest rates or even no interest temporarily, making it cheaper to pay off outstanding debt. Homeowners might also consider refinancing their mortgage or using home equity to pay down their credit card bills.

According to CreditSesame.com, 12 million credit-worthy Americans are currently overpaying their mortgages by an average of $436 a month. If they refinanced, the typical homeowner would save about $52,000 over 10 years -- money that could be used to reduce debt. But many consumers are simply unaware of this potential for savings.

Peer-to-peer loans represent another option for swapping out high-interest credit card debt for a lower interest loan. "About 60 to 65 percent of loans on Prosper are to pay off credit card debt," says Chris Larsen, CEO of Prosper.com, a popular peer-to-peer lending network.

3. Suggest professional help

For those who have admitted financial addictions, such as constant impulse shopping or a gambling problem, it's not inappropriate to suggest professional help.

Spending addicts may know deep down that they have a problem; they just don't know how to stop it -- at least not on their own.

"When you're trying to break a deeply entrenched and culturally sanctioned habit like over-shopping for clothes, you need support and guidance in order to make the change stick," says Dr. April Lane Benson, founder of StoppingOvershopping.com. "Trying it alone generally leads to disappointment and continuing the cycle. But when you work with experienced and empathetic guides, your chances of making a real change increase ten-fold."

4. Don't make assumptions or judge

Even if the problem seems obvious, don't make the mistake of assuming you know all the particulars about your loved one's debt problem. If you judge someone harshly or label their choices as foolish, that will likely stymie the conversation.

Remember also that debt itself may not be the main enemy. It's the patterns of poor management or overspending that often comprise the larger problem.

"All debt is not necessarily a bad thing," says Adrian Nazari, CEO of CreditSesame.com. "The question is: How can a consumer manage debt that so they can enjoy a better life and not be scammed or overburdened by debt?" Nazari says.

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Advertiser Disclosure: The credit, charge and prepaid card offers that appear on this website are from card companies which MoneyRates.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The site does not include all card companies or all available card offers.Editorial Disclosure: This content is not provided or commissioned by the bank advertiser. Opinions expressed here are author’s alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.UGC Disclosure: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.